Woolworths sees ‘lower than expected’ first quarter growth

Australian supermarket giant Woolworths has reported first quarter sales of $16.2 billion for the 2015 financial year, an increase of 3 per cent on the previous year or 4.1 per cent excluding Petrol.

“While first quarter sales were lower than expected, we are confident that our trading plans will improve momentum in the second quarter which includes the key Christmas period,” Mr O’Brien said.

Australian Food and Liquor

Chief Executive Officer, Grant O’Brien said Australian Food and Liquor delivered sales growth of 3.9 per cent on the previous year.

“Following a pleasing July result, trading was softer in August and September with growth impacted by differences in the timing of promotional activities compared to the prior year and the cycling of higher fuel discount activity,” Mr O’Brien said.

“We are focused on delivering lower prices everyday to our customers and launched our ‘Cheap Cheap’ campaign at the end of the quarter by reducing a number of prices on key household items,” Mr O’Brien said. “We were the first Australian supermarket to reduce the price of white bread to 85 cents and have also reduced prices on other staple products including Lamb Forequarter Chops and Beef Mince,” he said.

Petrol

Woolworths reported that Petrol sales decreased 4.5 per cent on the previous year, impacted by reduced fuel discount activity following the undertaking to the Australian Competition and Consumer Commission (ACCC).

Woolworths reported that New Zealand Supermarkets’ sales increased 1.1 per cent on the previous year (5.6 per cent increase in AUD), impacted by price deflation across key categories as well as ongoing subdued grocery market conditions.

“We have continued our focus on value through the ‘Price Lockdown’ and ‘Price Drop’ campaign and were the first supermarket in New Zealand with $1 bread,” Mr O’Brien said.

General merchandise

Woolworths reported that General Merchandise sales decreased 0.4 per cent on the previous year, with the BIG W transformation continuing to adversely impact results as previously advised.

“Positive comparable sales growth in Softgoods during the quarter is an indication that we are making progress with our new offer,” Mr O’Brien said.

Hotels

Hotel sales decreased 1.0 per cent on the previous year or increased 0.5 per cent excluding the impact of the additional Victorian gaming tax which came into effect from May 2014. Woolworths reported that trading conditions in Victoria and Queensland “remain challenging”.

Home Improvement

Woolworths reported that Home Improvement sales increased 20.7 per cent on the previous year. In Masters, sales increased 30.8 per cent.

“We commenced implementation of the changes we communicated in August, including an enhanced store format and range,” Mr O’Brien said. “We also launched the ‘Australia You’ve Been Paying Too Much’ campaign. Home Timber and Hardware delivered sales growth of 12 per cent, a pleasing result driven by recent store refurbishments,” he said.

Online sales

Woolworths reported that online sales across the Group increased more than 30 per cent for the quarter with further development of Woolworths’ Online business remaining a key focus.

“We have extended access to Click & Collect services, with BIG W and EziBuy orders now able to be collected from selected Supermarket locations,” Mr O’Brien said. “We also launched the ‘Dan Murphy’s Connections’ platform which provides customers with an extended range including products from boutique wineries and craft brewers,” he said.